Manufacturers continue "bright spell" of output growth

The upturn is being enjoyed by both small businesses and large-scale producers, while a sharp re-acceleration in demand for goods such as plant and machinery points to ongoing growth of business investment

Mnaufacturers have enjoyed one of their best spells of growth of the last two decades

Britain’s manufacturers took another step in their recovery last month as the sector continues to enjoy one of its best spells of the past two decades.

Data from the closely watched CIPS/Markit purchasing managers’ index survey for May gave a reading of 57 - with 50 separating growth from contraction.

The figure is close to April’s five-month high of 57.3 and maintains one of the sector’s brightest spells of output and new order growth in the 22-year history of the survey.

Markit said production is expanding at a quarterly rate close to 1.5%, although the sector is still some 7.5% smaller than its pre-crisis peak. At this growth rate it would take until late-2015 to achieve a full recovery.

The upturn is being enjoyed by both small businesses and large-scale producers, while a sharp re-acceleration in demand for goods such as plant and machinery points to ongoing growth of business investment.

A strong domestic market has been accompanied by one of the best growth spurts for new export orders in the survey’s history.

The benefits of the manufacturing upswing are also being shared with the wider economy as employment increased for the 13th month running.

Neil Prothero, deputy chief economist at EEF, the manufacturers’ organisation, said the sector is on track to expand for a fifth consecutive quarter, its strongest performance in four years.

He added: “Signs of a pick-up in export orders are especially welcome, as the broader rebalancing story still requires a significant boost in net trade to support the recent rebound in business investment.”

John Union, head of Corporate Banking, Barclays Wales Region, said: “Manufacturing production remained buoyant in May ensuring that the index continues to rise at above trend rates. As we move further into 2014 and levels of optimism begin to grow, we could start to see increased activity in the M&A space as manufacturers look to further drive cost efficiencies and find more ways to expand into growth markets.

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